Save Article

Small Banks Risk Catching Credit Ills

Their branches may be far from Wall Street, but some regional banks may be exposed to the same kinds of issues that are causing headaches for the world's largest financial institutions.

Hungry for growth in recent years, regional banks have pumped up their traditional investment portfolios by buying loans that have financed the leveraged-buyout boom. And like their larger brethren, some also have formed off-balance-sheet vehicles that issue commercial paper -- short-term debt that many companies use as an alternative to bank...